What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-04-25 compared with 2023-10-26 · 268 added, 328 removed, 630 unchanged (49% of the section changed)

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all other company data is presented in accordance with accounting principles generally accepted in the United States of America (GAAP).

As discussed in Item 1, Note 1, Accounting Policies, Page 8, effective January 1, 2023, we adopted ASU 2018-12, Financial Services - Insurance (Topic 944):

Targeted Improvements to the Accounting for Long-Duration Contracts.

We adjusted applicable financial statements.

Related financial data shown in Management's Discussion and Analysis of Financial Condition and Results of Operations also have been adjusted.

We present per share data on a diluted basis unless otherwise noted, adjusting those amounts for all stock splits and dividends.

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Factors that could cause or contribute to such differences include, but are not limited to:

• Effects of the COVID-19 pandemic that could affect results for reasons such as:

◦ Securities market disruption or volatility and related effects such as decreased economic activity and continued supply chain disruptions that affect our investment portfolio and book value

◦ An unusually high level of claims in our insurance or reinsurance operations that increase litigation-related expenses

◦ An unusually high level of insurance losses, including risk of legislation or court decisions extending business interruption insurance in commercial property coverage forms to cover claims for pure economic loss related to the COVID-19 pandemic

◦ Decreased premium revenue and cash flow from disruption to our distribution channel of independent agents, consumer self-isolation, travel limitations, business restrictions and decreased economic activity

◦ Inability of our workforce, agencies or vendors to perform necessary business functions

• Ongoing developments concerning business interruption insurance claims and litigation related to the COVID-19 pandemic that affect our estimates of losses and loss adjustment expenses or our ability to reasonably estimate such losses, such as:

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• The inherent unpredictability of litigation

• Effects of any future pandemic, or the resurgence of the COVID-19 pandemic, that could affect results for reasons such as:

• Securities market disruption or volatility and related effects such as decreased economic activity and continued supply chain disruptions that affect our investment portfolio and book value

• An unusually high level of claims in our insurance or reinsurance operations that increase litigation-related expenses

• An unusually high level of insurance losses, including risk of court decisions extending business interruption insurance in commercial property coverage forms to cover claims for pure economic loss related to such pandemic

• Decreased premium revenue and cash flow from disruption to our distribution channel of independent agents, consumer self-isolation, travel limitations, business restrictions and decreased economic activity

• Inability of our workforce, agencies or vendors to perform necessary business functions

• Unusually high levels of catastrophe losses due to risk concentrations, changes in weather patterns (whether as a result of global climate change or otherwise), environmental events, war or political unrest, terrorism incidents, cyberattacks, civil unrest or other causes

Cincinnati Financial Corporation Third-Quarter 2023 10-Q

• Increased frequency and/or severity of claims or development of claims that are unforeseen at the time of policy issuance, due to inflationary trends or other causes

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• Declines in overall stock market values negatively affecting our equity portfolio and book value

Cincinnati Financial Corporation First-Quarter 2024 10-Q

• Interest rate fluctuations or other factors that could significantly affect:

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• Our traditional life policy reserves

• Domestic and global events, such as Russia's invasion of Ukraine, war in the Middle East and recent disruptions in the banking and financial services industry, resulting in capital market or credit market uncertainty, followed by prolonged periods of economic instability or recession, that lead to:

• Domestic and global events, such as Russia’s invasion of Ukraine, war in the Middle East and disruptions in the banking and financial services industry, resulting in insurance losses, capital market or credit market uncertainty, followed by prolonged periods of economic instability or recession, that lead to:

• Significant or prolonged decline in the fair value of a particular security or group of securities and impairment of the asset(s)

• Significant decline in investment income due to reduced or eliminated dividend payouts from a particular security or group of securities

◦ Significant rise in losses from surety or director and officer policies written for financial institutions or other insured entities

• Significant rise in losses from surety or director and officer policies written for financial institutions or other insured entities or in losses from policies written by Cincinnati Re or Cincinnati Global

• Our inability to manage Cincinnati Global or other subsidiaries to produce related business opportunities and growth prospects for our ongoing operations

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• Perceptions that our level of service, particularly claims service, is no longer a distinguishing characteristic in the marketplace

Cincinnati Financial Corporation Third-Quarter 2023 10-Q

• Inability or unwillingness to nimbly develop and introduce coverage product updates and innovations that our competitors offer and consumers expect to find in the marketplace

Cincinnati Financial Corporation First-Quarter 2024 10-Q

• Actions of insurance departments, state attorneys general or other regulatory agencies, including a change to a federal system of regulation from a state-based system, that:

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The ultimate changes and eventual effects, if any, of these initiatives are uncertain.

Cincinnati Financial Corporation Third-Quarter 2023 10-Q

Cincinnati Financial Corporation First-Quarter 2024 10-Q

CORPORATE FINANCIAL HIGHLIGHTS

Net Income and Comprehensive Income Data

(Dollars in millions, except per share data) Three months ended September 30, Nine months ended September 30,

2023 2022 % Change 2023 2022 % Change

(Dollars in millions, except per share data) Three months ended March 31,

2024 2023 % Change

Earned premiums $ 2,071 $ 1,918 8

Investment income, net of expenses (pretax) 245 210 17

Investment gains and losses, net (pretax) (456) (674) 32 84 (2,494) nm

Investment gains and losses, net (pretax) 612 106 477

Total revenues 2,935 2,241 31

Net income (loss) (99) (416) 76 660 (1,500) nm

Comprehensive income (loss) (300) (726) 59 447 (2,584) nm

Net income (loss) per share—diluted (0.63) (2.63) 76 4.17 (9.42) nm

Net income 755 225 236

Comprehensive income 748 312 140

Net income per share—diluted 4.78 1.42 237

Cash dividends declared per share 0.81 0.75 8

Diluted weighted average shares outstanding 157.9 158.5 0

Total revenues increased $401 million for the third quarter of 2023, compared with the third quarter of 2022, primarily due to a smaller reduction in net investment gains in addition to higher earned premiums and investment income.

Total revenues increased $694 million for the first quarter of 2024, compared with the first quarter of 2023, primarily due to an increase in net investment gains in addition to higher earned premiums and investment income.

Premium and investment revenue trends are discussed further in the respective sections of Financial Results.

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The change in fair value of securities is also generally independent of the insurance underwriting process.

The net loss of $99 million for the third quarter of 2023, compared with a net loss in the third quarter of 2022 of $416 million, was a change of $317 million, including increases of $172 million in after-tax net investment gains and losses, $25 million in after-tax investment income and $141 million in after-tax property casualty underwriting income.

Catastrophe losses for the third quarter of 2023, mostly weather related, were $58 million lower after taxes and favorably affected both net income and property casualty underwriting income.

Life insurance segment results increased by $4 million on a pretax basis.

For the first nine months of 2023, net income increased $2.160 billion, compared with the first nine months of 2022,

including increases of $2.037 billion in after-tax investment gains and losses, $66 million in after-tax investment income and $81 million in after-tax property casualty underwriting income.

The property casualty underwriting income increase included an unfavorable $116 million after-tax effect from higher catastrophe losses.

Net income for the first quarter of 2024, compared with first-quarter 2023, increased $530 million, including increases of $399 million in after-tax net investment gains and losses, $111 million in after-tax property casualty underwriting income and $28 million in after-tax investment income.

Catastrophe losses for the first quarter of 2024, mostly weather related, were $93 million lower after taxes and favorably affected both net income and property casualty underwriting income.

Life insurance segment results increased by $2 million on a pretax basis.

The increase in property casualty underwriting income for the third quarter of 2023 included improved overall insured loss experience before catastrophe effects, as price increases have helped to offset elevated paid losses reflecting economic or other forms of inflation that are increasing our uncertainty regarding ultimate losses.

Until longer-term paid loss cost trends become more clear, we intend to remain prudent in reserving for estimated ultimate losses and this is discussed further in Financial Results by property casualty insurance segment.

Performance by segment is discussed below in Financial Results.

As discussed in our 2022 Annual Report on Form 10-K, Item 7, Executive Summary, Page 48, there are several reasons why our performance during 2023 may be below our long-term targets.

As discussed in our 2023 Annual Report on Form 10-K, Item 7, Executive Summary, Page 48, there are several reasons why our performance during 2024 may ultimately be below our long-term targets.

The board of directors is committed to rewarding shareholders directly through cash dividends and through share repurchase authorizations.

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publicly traded companies.

In January 2023, the board of directors increased the regular quarterly dividend to 75 cents per share, setting the stage for our 63 rd consecutive year of increasing cash dividends.

During the first nine months of 2023, cash dividends declared by the company increased 9% compared with the same period of 2022.

In January 2024, the board of directors increased the regular quarterly dividend to 81 cents per share, setting the stage for our 64 th consecutive year of increasing cash dividends.

During the first three months of 2024, cash dividends declared by the company increased 8% compared with the same period of 2023.

Our board regularly evaluates relevant factors in decisions related to dividends and share repurchases.

The 2023 dividend

Cincinnati Financial Corporation Third-Quarter 2023 10-Q

increase reflected our strong operating performance and signaled management's and the board's positive outlook and confidence in our outstanding capital, liquidity and financial flexibility.

The 2024 dividend increase reflected our strong operating performance and signaled management's and the board's positive outlook and confidence in our outstanding capital, liquidity and financial flexibility.

Cincinnati Financial Corporation First-Quarter 2024 10-Q

Balance Sheet Data and Performance Measures

(Dollars in millions, except share data) At September 30, At December 31,

(Dollars in millions, except share data) At March 31, At December 31,

Total investments $ 26,249 $ 25,357

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Debt-to-total-capital ratio 6.1 % 6.3 %

Total assets at September 30, 2023, increased 4% compared with year-end 2022, and included a 4% increase in total investments that reflected net purchases that were partially offset by lower fair values for many securities in our portfolio.

Shareholders' equity increased 1% and book value per share also increased 1% during the first nine months of 2023.

Total assets at March 31, 2024, increased 3% compared with year-end 2023, and included a 4% increase in total investments that reflected net purchases and higher fair values for many securities in our equity portfolio.

Shareholders' equity increased 5% and book value per share also increased 5% during the first three months of 2024.

Our debt-to-total-capital ratio (capital is the sum of debt plus shareholders' equity) decreased compared with year-end 2023.

Our value creation ratio is our primary performance metric.

As shown in the tables below, that ratio was 4.4% for the first nine months of 2023, and was more than the same period in 2022 primarily due to a higher amount in overall net gains from our investment portfolio.

Book value per share increased $0.71 during the first nine months of 2023 and contributed 1.1 percentage points to the value creation ratio, while dividends declared at $2.25 per share contributed 3.3 points.

Value creation ratios by major components and in total, along with calculations from per-share amounts, are shown in the tables below.

Three months ended September 30, Nine months ended September 30,

2023 2022 2023 2022

Value creation ratio major components:

As shown in the tables below, that ratio was 5.9% for the first three months of 2024, better than the same period in 2023, including higher net income before investment gains and a higher amount in overall net gains from our investment portfolio.

Book value per share increased $3.77 during the first three months of 2024 and contributed 4.9 percentage points to the value creation ratio, while dividends declared at $0.81 per share contributed 1.0 points.

Value creation ratio major contributors and in total, along with calculations from per-share amounts, are shown in the tables below.

Three months ended March 31,

Value creation ratio major contributors:

Net income before investment gains 2.3 % 1.3 %

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Value creation ratio 5.9 % 3.1 %

Cincinnati Financial Corporation Third-Quarter 2023 10-Q

(Dollars are per share) Three months ended September 30, Nine months ended September 30,

2023 2022 2023 2022

Book value change per share

Book value as originally reported December 31,

Cumulative effect of change in accounting for

long-duration insurance contracts, net of tax 0.20

Book value as adjusted December 31, 2022 $ 67.21

Cincinnati Financial Corporation First-Quarter 2024 10-Q

(Dollars are per share) Three months ended March 31,

Value creation ratio:

End of period book value*- as originally reported $ 67.72 $ 60.01 $ 67.72 $ 60.01

Less beginning of period book value - as

originally reported 70.33 66.30 67.01 81.72

Change in book value - as originally reported (2.61) (6.29) 0.71 (21.71)

End of period book value* $ 80.83 $ 68.33

Less beginning of period book value 77.06 67.01

Change in book value 3.77 1.32

Dividend declared to shareholders 0.81 0.75

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We market our insurance products through a select group of independent insurance agencies as discussed in our 2023 Annual Report on Form 10-K, Item 1, Our Business and Our Strategy, Page 6.

At September 30, 2023, we actively marketed through 2,053 agencies located in 46 states.

At March 31, 2024, we actively marketed through 2,125 agencies located in 46 states.

We maintain a long-term perspective that guides us in addressing immediate challenges or opportunities while focusing on the major decisions that best position our company for success through all market cycles.

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• Premium growth – We believe our agency relationships and initiatives can lead to a property casualty written premium growth rate over any five-year period that exceeds the industry average.

For the first nine months of 2023, our consolidated property casualty net written premium year-over-year growth was 9%, compared with the industry's 10% growth rate reported by A.M.

Best for the first six months of 2023.

For the first three months of 2024, our consolidated property casualty net written premium year-over-year growth was 11%.

As of March 2024, A.M.

Best projected the industry's full-year 2024 written premium growth at approximately 9%.

For the five-year period 2019 through 2023, our growth rate exceeded that of the industry.

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• Combined ratio – We believe our underwriting philosophy and initiatives can generate a GAAP combined ratio over any five-year period that is consistently within the range of 92% to 98%.

For the first nine months of 2023, our GAAP combined ratio was 97.5%, including 11.9 percentage points of current accident year catastrophe losses partially offset by 3.8 percentage points of favorable loss reserve development on prior accident years.

Our statutory combined ratio was 96.5% for the first nine months of 2023, comparing favorably with the industry's 104.5% reported by A.M.

Best for the first six months of 2023.

For the first three months of 2024, our GAAP combined ratio was 93.6%, including 7.5 percentage points of current accident year catastrophe losses partially offset by 5.0 percentage points of favorable loss reserve development on prior accident years.

Our statutory combined ratio was 92.3% for the first three months of 2024.

As of March 2024, A.M.

Best projected the industry's full-year 2024 statutory combined ratio at approximately 101%, including approximately 7 percentage points of catastrophe losses and a favorable effect of less than 1 percentage point of loss reserve development on prior accident years.

The industry's ratio again excludes its mortgage and financial guaranty lines of business.

Cincinnati Financial Corporation Third-Quarter 2023 10-Q

• Investment contribution – We believe our investment philosophy and initiatives can drive investment income growth and lead to a total return on our equity investment portfolio over a five-year period that exceeds the five-year return of the Standard & Poor's 500 Index.

For the first nine months of 2023, pretax investment income was $655 million, up 14% compared with the same period in 2022.

For the first three months of 2024, pretax investment income was $245 million, up 17% compared with the same period in 2023.

We believe our investment portfolio mix provides an appropriate balance of income stability and growth with capital appreciation potential.

Cincinnati Financial Corporation First-Quarter 2024 10-Q

Financial Strength

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Our strong parent-company liquidity and financial strength increase our flexibility to maintain a cash dividend through all periods and to continue to invest in and expand our insurance operations.

At September 30, 2023, we held $4.561 billion of our cash and cash equivalents and invested assets at the parent-company level, of which $4.142 billion, or 90.8%, was invested in common stocks, and $227 million, or 5.0%, was cash or cash equivalents.

Our debt-to-total-capital ratio was 7.1% at September 30, 2023.

Another important indicator of financial strength is our ratio of property casualty net written premiums to statutory surplus, which was 1.2-to-1 for the 12 months ended September 30, 2023, compared with 1.1-to-1 at year-end 2022.

At March 31, 2024, we held $4.906 billion of our cash and cash equivalents and invested assets at the parent-company level, of which $4.543 billion, or 92.6%, was invested in common stocks, and $163 million, or 3.3%, was cash or cash equivalents.

Our debt-to-total-capital ratio was 6.1% at March 31, 2024.

Another important indicator of financial strength is our ratio of property casualty net written premiums to statutory surplus, which was 1.0-to-1 for the 12 months ended March 31, 2024, matching year-end 2023.

Financial strength ratings assigned to us by independent rating firms also are important.

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please see each rating agency's website for its most recent report on our ratings.

At October 25, 2023, our insurance subsidiaries continued to be highly rated.

At April 24, 2024, our insurance subsidiaries continued to be highly rated.

Insurer Financial Strength Ratings

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A+ Strong 5 of 21 A+ Strong 5 of 21 - - - Stable

Cincinnati Financial Corporation Third-Quarter 2023 10-Q

Cincinnati Financial Corporation First-Quarter 2024 10-Q

CONSOLIDATED PROPERTY CASUALTY INSURANCE HIGHLIGHTS

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SM (Cincinnati Global).

(Dollars in millions) Three months ended September 30, Nine months ended September 30,

2023 2022 % Change 2023 2022 % Change

(Dollars in millions) Three months ended March 31,

2024 2023 % Change

Earned premiums $ 1,992 $ 1,841 8

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Combined ratio before catastrophe losses and prior years reserve development 91.1 % 90.1 % 1.0

Our consolidated property casualty insurance operations generated an underwriting profit of $112 million for the third quarter of 2023 and $149 million for the first nine months of the year.

Compared with an underwriting loss of $66 million for the third quarter of 2022, the third-quarter 2023 improvement of $178 million included a favorable decrease of $73 million in losses from catastrophes, mostly caused by severe weather.

The third-quarter 2023 change in underwriting profitability also included higher current accident year loss and loss expenses before catastrophe losses that grew more slowly than earned premiums and higher amounts of favorable reserve development on prior accident years.The nine-month underwriting profit improvement of $102 million, compared with the first nine months of 2022, included an unfavorable increase of $147 million in losses from catastrophes.

The nine-month 2023 period also experienced higher current accident year loss and loss expenses before catastrophe losses that grew more slowly than earned premiums and higher amounts of favorable reserve development on prior accident years.

Elevated inflation was a driver of higher losses and loss expenses in 2023 as costs have increased significantly to repair damaged autos or other property that we insure.

Our consolidated property casualty insurance operations generated an underwriting profit of $131 million for the first quarter of 2024.

Compared with an underwriting loss of $10 million for the first quarter of 2023, the first-quarter 2024 improvement of $141 million included a favorable decrease of $118 million in losses from catastrophes, mostly caused by severe weather.

The first-quarter 2024 change in underwriting profitability also included higher current accident year loss and loss expenses before catastrophe losses that grew slightly faster than earned premiums and higher amounts of favorable reserve development on prior accident years.

Underwriting results for the first quarter of 2024 included improved overall insured loss experience before catastrophe effects, as price increases have helped to offset recent-year elevated paid losses reflecting economic or other forms of inflation.

Elevated inflation was a driver of higher losses and loss expenses in both 2024 and 2023 as costs have increased significantly to repair damaged autos or other property that we insure.

We also experienced higher losses for liability coverages for some of our lines of business.

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We believe future property casualty underwriting results will continue to benefit from price increases and our ongoing initiatives to improve pricing precision and loss experience related to claims and loss control practices.

Cincinnati Financial Corporation Third-Quarter 2023 10-Q

For all property casualty lines of business in aggregate, net loss and loss expense reserves at September 30, 2023, were $655 million, or 8%, higher than at year-end 2022, including an increase of $539 million for the incurred but not reported (IBNR) portion.

For all property casualty lines of business in aggregate, net loss and loss expense reserves at March 31, 2024, were $233 million, or 3%, higher than at year-end 2023, including an increase of $272 million for the incurred but not reported (IBNR) portion.

Cincinnati Financial Corporation First-Quarter 2024 10-Q

We measure and analyze property casualty underwriting results primarily by the combined ratio and its component ratios.

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A combined ratio above 100% indicates that an insurance company's losses and expenses exceeded premiums.

Our consolidated property casualty combined ratio for the third quarter of 2023 improved by 9.5 percentage points, compared with the same period of 2022, including a decrease of 4.8 points from lower catastrophe losses and loss expenses.

For the first nine months of 2023, compared with the 2022 nine-month period, our combined ratio decreased by 1.7 percentage points, despite an increase of 1.8 points from catastrophe losses and loss expenses.

Other combined ratio components that increased are discussed below and in further detail in Financial Results by property casualty insurance segment.

Our consolidated property casualty combined ratio for the first quarter of 2024 improved by 7.1 percentage points, compared with the same period of 2023, including a decrease of 6.9 points from lower catastrophe losses and loss expenses.

Other combined ratio components that changed are discussed below and in further detail in Financial Results by property casualty insurance segment.

The combined ratio can be affected significantly by natural catastrophe losses and other large losses as discussed in detail below.

The combined ratio can also be affected by updated estimates of loss and loss expense reserves established for claims that occurred in prior periods, referred to as prior accident years.

Net favorable development on prior accident year reserves, including reserves for catastrophe losses, benefited the combined ratio by 3.8 percentage points in the first nine months of 2023, compared with 2.8 percentage points in the same period of 2022.

Net favorable development on prior accident year reserves, including reserves for catastrophe losses, benefited the combined ratio by 5.0 percentage points in the first three months of 2024, compared with 3.2 percentage points in the same period of 2023.

Net favorable development is discussed in further detail in Financial Results by property casualty insurance segment.

The ratio for current accident year loss and loss expenses before catastrophe losses improved in the first nine months of 2023.

That 59.7% ratio was 1.3 percentage points lower, compared with the 61.0% accident year 2022 ratio measured as of September 30, 2022, including a decrease of 0.6 points in the ratio for large losses of $2 million or more per claim, discussed below.

The ratio improvement of 1.3 percentage points included an increase of 3.0 points for the IBNR portion and a decrease of 4.3 points for the case incurred portion.

The underwriting expense ratio increased for the third quarter and decreased for the first nine months of 2023, compared with the same periods a year ago.

The increase for third-quarter 2023 was primarily due to an increase in employee and travel-related expenses while the nine-month 2023 decrease was primarily due to a decrease in profit-sharing commissions for agencies.

The ratios also included ongoing expense management efforts and higher earned premiums.

Cincinnati Financial Corporation Third-Quarter 2023 10-Q

The ratio for current accident year loss and loss expenses before catastrophe losses increased in the first three months of 2024.

That 61.3% ratio was 0.3 percentage points higher, compared with the 61.0% accident year 2023 ratio measured as of March 31, 2023, including a decrease of 1.6 points in the ratio for large losses of $2 million or more per claim, discussed below.

The ratio increase of 0.3 percentage points included an increase of 1.8 points for the IBNR portion and a decrease of 1.5 points for the case incurred portion.

The underwriting expense ratio increased for the first three months of 2024, compared with the same period a year ago.

The increase was primarily due to an increase in profit-sharing commissions for agencies.

The ratio also included ongoing expense management efforts and higher earned premiums.

Consolidated Property Casualty Insurance Premiums

(Dollars in millions) Three months ended September 30, Nine months ended September 30,

2023 2022 % Change 2023 2022 % Change

(Dollars in millions) Three months ended March 31,

2024 2023 % Change

Agency renewal written premiums $ 1,683 $ 1,535 10

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Price change trends that heavily influence renewal written premium increases or decreases, along with other premium growth drivers for 2024, are discussed in more detail by segment below in Financial Results.

Consolidated property casualty net written premiums for the third quarter and nine months ended September 30, 2023, grew $207 million and $513 million compared with the same periods of 2022.

Consolidated property casualty net written premiums for the three months ended March 31, 2024, grew $229 million compared with the same period of 2023.

Our premium growth initiatives from prior years have provided an ongoing favorable effect on growth during the current year, particularly as newer agency relationships mature over time.

Consolidated property casualty agency new business written premiums increased by $49 million and $73 million for the third quarter and first nine months of 2023, compared with the same periods of 2022.

New agency appointments during 2023 and 2022 produced a $44 million increase in standard lines new business for the first nine months of 2023 compared with the same period of 2022.

Consolidated property casualty agency new business written premiums increased by $95 million for the first three months of 2024, compared with the same period of 2023.

New agency appointments during 2024 and 2023 produced a $24 million increase in standard lines new business for the first three months of 2024 compared with the same period of 2023.

As we appoint new agencies that choose to move accounts to us, we report these accounts as new business.

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We believe these seasoned accounts tend to be priced more accurately than business that may be less familiar to our agent upon obtaining it from a competing agent.

Net written premiums for Cincinnati Re, included in other written premiums, decreased by $1 million and $26 million to $85 million and $492 million, respectively, for the three and nine months ended September 30, 2023, compared with the same periods of 2022.

Cincinnati Financial Corporation First-Quarter 2024 10-Q

Net written premiums for Cincinnati Re, included in other written premiums, decreased by $28 million to $202 million for the three months ended March 31, 2024, compared with the same period of 2023.

Cincinnati Re assumes risks through reinsurance treaties and in some cases cedes part of the risk and related premiums to one or more unaffiliated reinsurance companies through transactions known as retrocessions.

Cincinnati Global is also included in other written premiums.

Net written premiums increased for Cincinnati Global by $12 million and $38 million to $69 million and $215 million, respectively, for the three and nine months ended September 30, 2023, compared with the same periods of 2022.

Net written premiums increased for Cincinnati Global by $18 million to $82 million for the three months ended March 31, 2024, compared with the same period of 2023.

Other written premiums include premiums ceded to reinsurers as part of our reinsurance ceded program.

An increase in ceded premiums reduced net written premiums by $7 million and $27 million for the third quarter and first nine months of 2023, compared with the same periods of 2022.

An increase in ceded premiums reduced net written premiums by $5 million for the first three months of 2024, compared with the same period of 2023.

Catastrophe losses and loss expenses typically have a material effect on property casualty results and can vary significantly from period to period.

Losses from catastrophes contributed 9.1 and 11.3 percentage points to the combined ratio in the third quarter and first nine months of 2023, compared with 13.9 and 9.5 percentage points in the same periods of 2022.

Effective June 1, 2023, we restructured our reinsurance program for Cincinnati Re that included property catastrophe excess of loss coverage.

The restructured treaties are for a period of one year and provide $40 million of coverage for various combinations of occurrences for business written in North America on a direct basis and by Cincinnati Re.

Cincinnati Global catastrophe losses are not applicable to the treaty.

Losses from catastrophes contributed 5.9 percentage points to the combined ratio in the first three months of 2024, compared with 12.8 percentage points in the same period of 2023.

The reinsurance program for Cincinnati Re effective June 1, 2023, provides property catastrophe excess of loss coverage and includes $40 million of coverage for various combinations of occurrences for business written in North America on a direct basis.

There is a per occurrence limit of $20 million for Cincinnati Re catastrophe losses in excess of $80 million per event.

The remaining coverage is for business written by Cincinnati Re and on a direct basis that applies to catastrophe losses in excess of $600 million per event.

Ceded premiums for these treaties are estimated to be approximately $8 million.

Cincinnati Financial Corporation Third-Quarter 2023 10-Q

We did not renew our quota share reinsurance arrangement for our personal lines risks in California that we insure through excess and surplus lines policies.

The expiring treaty first became effective in May 2022 and no similar treaty replaced it.

The remaining coverage is for business written by Cincinnati Re and on a direct basis for catastrophe losses in excess of $600 million per event.

During 2023 and for the first three months of 2024, there was no recovery from reinsurers pertaining to these treaties.

The following table shows consolidated property casualty insurance catastrophe losses and loss expenses incurred, net of reinsurance, as well as the effect of loss development on prior period catastrophe events.

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Consolidated Property Casualty Insurance Catastrophe Losses and Loss Expenses Incurred

(Dollars in millions, net of reinsurance) Three months ended September 30, Nine months ended September 30,

Dates Region lines lines lines Other Total lines lines lines Other Total

1-4 Midwest, Northeast, South $ (1) $ (3) $ — $ — $ (4) $ 27 $ 27 $ — $ 2 $ 56

23-28 Midwest, Northeast, South (2) (3) — — (5) 20 24 — — 44

1 Midwest, Northeast, South (1) — — — (1) 62 33 — — 95

(Dollars in millions, net of reinsurance) Three months ended March 31,

Dates Region lines lines lines Other Total

8-10 Midwest, Northeast, South $ 18 $ 9 $ — $ — $ 27

May 2-9 Midwest, South (1) (1) — — (2) 23 7 — — 30

21-27 Midwest, Northeast, South, West 14 4 — — 18 23 17 — — 40

4 Midwest, Northeast, South, West 8 11 — — 19 10 16 — — 26

12-17 Midwest, South 32 22 — — 54

All other 2024 catastrophes 25 42 1 — 68

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1-4 Midwest, Northeast, South $ 30 $ 34 $ 1 $ — $ 65

27 - Oct.1 South (Ian) 26 51 — 143 220 26 51 — 143 220

23-28 Midwest, Northeast, South 13 27 1 — 41

1 Midwest, Northeast, South 42 24 — — 66

All other 2023 catastrophes 21 55 — 5 81

1 unchanged sentence

Calendar year incurred total $ 110 $ 115 $ 1 $ 9 $ 235

Cincinnati Financial Corporation Third-Quarter 2023 10-Q

Cincinnati Financial Corporation First-Quarter 2024 10-Q

The following table includes data for losses incurred of $2 million or more per claim, net of reinsurance.

Consolidated Property Casualty Insurance Losses Incurred by Size

(Dollars in millions, net of reinsurance) Three months ended September 30, Nine months ended September 30,

2023 2022 % Change 2023 2022 % Change

(Dollars in millions, net of reinsurance) Three months ended March 31,

2024 2023 % Change

Current accident year losses greater than $5 million $ — $ 36 (100)

17 unchanged sentences

Our analysis continues to indicate no unexpected concentration of large losses and case reserve increases by risk category, geographic region, policy inception, agency or field marketing territory.

The third-quarter 2023 property casualty total large losses incurred of $108 million, net of reinsurance, was higher than the $77 million quarterly average during full-year 2022 and the $95 million experienced for the third quarter of 2022.

The ratio for these large losses was 0.2 percentage points higher compared with last year's third quarter.

The third-quarter 2023 amount of total large losses incurred unfavorably contributed to the decrease in the nine-month 2023 total large loss ratio, compared with 2022, partially offsetting a first-half 2023 ratio that was 0.7 points lower than the first half of 2022.

We believe results for the three- and nine-month periods largely reflected normal fluctuations in loss patterns and normal variability in large case reserves for claims above $2 million.

The first-quarter 2024 property casualty total large losses incurred of $44 million, net of reinsurance, was lower than the $95 million quarterly average during full-year 2023 and the $60 million experienced for the first quarter of 2023.

The ratio for these large losses was 1.0 percentage point lower compared with last year's first quarter.

We believe results for the three-month period largely reflected normal fluctuations in loss patterns and normal variability in large case reserves for claims above $2 million.

Losses by size are discussed in further detail in results of operations by property casualty insurance segment.

6 unchanged sentences

• Investments

Cincinnati Financial Corporation Third-Quarter 2023 10-Q

Cincinnati Financial Corporation First-Quarter 2024 10-Q

COMMERCIAL LINES INSURANCE RESULTS

(Dollars in millions) Three months ended September 30, Nine months ended September 30,

2023 2022 % Change 2023 2022 % Change

(Dollars in millions) Three months ended March 31,

2024 2023 % Change

Earned premiums $ 1,082 $ 1,056 2

4 unchanged sentences

Current accident year catastrophe losses 75 106 (29)

Prior accident years before catastrophe losses (33) — nm (123) (34) (262)

Prior accident years catastrophe losses (1) (4) 75 (2) (17) 88

Prior accident years before catastrophe losses (30) (36) 17

Prior accident years catastrophe losses (8) 4 nm

Loss and loss expenses 719 748 (4)

Underwriting expenses 325 311 5

Underwriting profit $ 52 $ 11 373 $ 83 $ 25 232

Underwriting profit (loss) $ 39 $ (2) nm

Ratios as a percent of earned premiums:

10 unchanged sentences

Performance highlights for the commercial lines segment include:

• Premiums – Earned premiums and net written premiums for the commercial lines segment grew during the third quarter and first nine months of 2023, compared with the same periods a year ago, reflecting renewal written premium growth that continued to include higher average pricing.

• Premiums – Earned premiums and net written premiums for the commercial lines segment grew during the first three months of 2024, compared with the same period a year ago, due to agency renewal written premium growth that continued to include higher average pricing as well as growth in agency new business written premiums.

The table below analyzes the primary components of premiums.

1 unchanged sentence

We seek to maintain appropriate pricing discipline for both new and renewal business as our agents and underwriters assess account quality to make careful decisions on a policy-by-policy basis whether to write or renew a policy.

Agency renewal written premiums increased by 6% for both the third quarter and first nine months of 2023, compared with the same periods of 2022, including price increases.

During the third quarter of 2023, our overall standard commercial lines policies averaged estimated renewal price increases at percentages near the low end of the high-single-digit range.

Agency renewal written premiums increased by 3% for the first three months of 2024, compared with the same period of 2023, including price increases.

During the first quarter of 2024, our overall standard commercial lines policies averaged estimated renewal price increases at percentages near the low end of the high-single-digit range.

We continue to segment commercial lines policies, emphasizing identification and retention of those we believe have relatively stronger pricing.

1 unchanged sentence

We measure average changes in commercial lines renewal pricing as the percentage rate of change in renewal premium for the new policy period compared with the premium for the expiring policy period, assuming no change in the level of insured exposures or policy coverage between those periods for the respective policies.

Cincinnati Financial Corporation Third-Quarter 2023 10-Q

Our average overall commercial lines renewal pricing change includes the impact of flat pricing for certain coverages within package policies written for a three-year term that were in force but did not expire during the period being measured.

Cincinnati Financial Corporation First-Quarter 2024 10-Q

the period being measured.

Therefore, our reported change in average commercial lines renewal pricing reflects a blend of three-year policies that did not expire and other policies that did expire during the measurement period.

For commercial lines policies that did expire and were then renewed during the third quarter of 2023, we estimate that our average percentage price increases were in the high-single-digit range for our commercial property, commercial auto and commercial casualty lines of business.

The estimated average percentage price change for workers' compensation was a decrease in the low-single-digit range.

Our commercial lines segment's increase in agency renewal written premiums for the first nine months of 2023 also included changes in the level of insured exposures.

For commercial lines policies that did expire and were then renewed during the first quarter of 2024, we estimate that our average percentage price increases were in the high-single-digit range for our commercial casualty, commercial property and commercial auto lines of business.

The estimated average percentage price change for workers' compensation was a decrease in the mid-single-digit range.

Our commercial lines segment's increase in agency renewal written premiums for the first three months of 2024 also included changes in the level of insured exposures.

Part of the insured exposure increase reflects our response to inflation effects that increase the cost of building materials to repair damaged commercial structures.

1 unchanged sentence

Renewal premiums for certain policies, primarily our commercial casualty and workers' compensation lines of business, include the results of policy audits that adjust initial premium amounts based on differences between estimated and actual sales or payroll related to a specific policy.

Audits completed during the first nine months of 2023 contributed $105 million to net written premiums, compared with $72 million for the same period of 2022.

New business written premiums for commercial lines decreased $1 million and $39 million during the third quarter and first nine months of 2023, compared with the same periods of 2022, reflecting pricing discipline in a highly competitive market.

Audits completed during the first three months of 2024 contributed $29 million to net written premiums, compared with $35 million for the same period of 2023.

New business written premiums for commercial lines increased $48 million during the first three months of 2024, compared with the same period of 2023, as we continued to carefully underwrite each policy in a highly competitive market.

Trend analysis for year-over-year comparisons of individual quarters is more difficult to assess for commercial lines new business written premiums, due to inherent variability.

1 unchanged sentence

Other written premiums include premiums ceded to reinsurers as part of our reinsurance ceded program.

For our commercial lines insurance segment, an increase in ceded premiums reduced net written premiums by $6 million and $17 million for the third quarter and first nine months of 2023, compared with the same periods of 2022.

For our commercial lines insurance segment, an increase in ceded premiums reduced net written premiums by less than $1 million for the first three months of 2024, compared with the same period of 2023.

Commercial Lines Insurance Premiums

(Dollars in millions) Three months ended September 30, Nine months ended September 30,

2023 2022 % Change 2023 2022 % Change

(Dollars in millions) Three months ended March 31,

2024 2023 % Change

Agency renewal written premiums $ 1,076 $ 1,041 3

4 unchanged sentences

Earned premiums $ 1,082 $ 1,056 2

• Combined ratio – The third-quarter 2023 commercial lines combined ratio improved by 3.8 percentage points, compared with the third quarter of 2022, despite an increase of 2.2 points in losses from catastrophes.

The third-quarter combined ratio also decreased 4.0 points from current accident year loss and loss expenses before catastrophe losses, including an increase of 2.3 points for the IBNR portion and a decrease of 6.3 points for the case incurred portion.

For the first nine months of 2023, the combined ratio improved by 1.8 percentage points, compared with the same period a year ago, despite an increase of 3.2 points in losses from catastrophes.

The nine-month 2023 combined ratio also included a decrease of 1.9 points from current accident year loss and loss expenses before catastrophe losses, including an increase of 4.1 points for the IBNR portion and a decrease of 6.0 points for the case incurred portion.

• Combined ratio – The first-quarter 2024 commercial lines combined ratio improved by 3.9 percentage points, compared with the first quarter of 2023, including a decrease of 4.2 points in losses from catastrophes.

The first-quarter combined ratio also decreased 0.9 points from current accident year loss and loss expenses before catastrophe losses, including an increase of 1.7 points for the IBNR portion and a decrease of 2.6 points for the case incurred portion.

Underwriting results also included a higher level of favorable reserve development on prior accident years, as discussed below.

The current accident year ratios were measured as of September 30 of the respective years and included a decrease of 1.5 percentage points for the third quarter and a decrease of 0.8 points for the first nine months of 2023 in the ratio for large losses of $2 million or more per claim, discussed below.

The current accident year ratios were measured as of March 31 of the respective years and included a decrease of 2.9 percentage points for the first three months of 2024 in the ratio for large losses of $2 million or more per claim, discussed below.

When estimating the ultimate cost of total loss and loss expenses, we consider many factors, including trends for inflation, historical paid and reported losses, large loss activity and other data or information for the industry or our company.

Elevated inflation was a driver of higher losses and loss expenses as costs have increased significantly to repair damaged business property or autos that we insure, in addition to higher losses for liability

Cincinnati Financial Corporation Third-Quarter 2023 10-Q

coverages for some of our lines of business.

Elevated inflation in recent years has been a driver of higher losses and loss expenses as costs have increased significantly to repair damaged business property or autos that we insure, in addition to higher losses for liability coverages for some of our lines of business.

Due to increased uncertainty regarding ultimate losses, we intend to remain prudent in reserving for estimated ultimate losses until longer-term loss cost trends become more clear.

Commercial umbrella coverages, part of our commercial casualty line of business that help protect businesses against liability from occurrences such as accidents or injuries, contributed a decrease of approximately 2.5 percentage points to the commercial lines segment nine-month 2023 ratio for loss and loss expenses decrease of 1.5% shown in the table above.

For the first nine months of 2023, incurred losses and loss expenses for commercial umbrella coverages of $257 million decreased $59 million or 19%, compared with the same period of 2022, including a decrease of $8 million or 7% for the IBNR portion, while earned premiums of $379 million increased 2%.

The estimated combined ratio for commercial umbrella for the first nine months of 2023 was 96%, compared with an estimated 115% for the same period of 2022.

Commercial umbrella paid loss experience is inherently variable.

The profile of coverage limits for policies in force at the end of 2022 included 43% with $1 million of coverage per policy, 91% with $5 million or less and 99% with $10 million or less of coverage.

Our commercial umbrella insurance coverages have a strong record of profitability for us, including an estimated combined ratio averaging below 85% for the five years ending in 2022.

Catastrophe losses and loss expenses accounted for 6.7 and 9.4 percentage points of the combined ratio for the third quarter and first nine months of 2023, compared with 4.5 and 6.2 percentage points for the same periods a year ago.

Catastrophe losses and loss expenses accounted for 6.2 percentage points of the combined ratio for the first three months of 2024, compared with 10.4 percentage points for the same period a year ago.

Through 2023, the 10-year annual average for that catastrophe measure for the commercial lines segment was 5.9 percentage points, and the five-year annual average was 6.5 percentage points.

The net effect of reserve development on prior accident years during the third quarter and first nine months of 2023 was favorable for commercial lines overall by $34 million and $125 million, compared with $4 million and $51 million for the same periods in 2022.

For the first nine months of 2023, our workers' compensation, commercial casualty and commercial property lines of business were the main contributors to the commercial lines net favorable reserve development on prior accident years.

The net favorable reserve development recognized during the first nine months of 2023 for our commercial lines insurance segment was mainly for accident years 2022 and 2020 and was primarily due to lower-than-anticipated loss emergence on known claims.

Cincinnati Financial Corporation First-Quarter 2024 10-Q

The net effect of reserve development on prior accident years during the first three months of 2024 was favorable for commercial lines overall by $38 million, compared with $32 million for the same period in 2023.

For the first three months of 2024, our commercial property and workers' compensation lines of business were the main contributors to the commercial lines net favorable reserve development on prior accident years.

The net favorable reserve development recognized during the first three months of 2024 for our commercial lines insurance segment was mainly for accident years 2023 and 2022 and was primarily due to lower-than-anticipated loss emergence on known claims.

Reserve estimates are inherently uncertain as described in our 2023 Annual Report on Form 10-K, Item 7, Critical Accounting Estimates, Property Casualty Insurance Loss and Loss Expense Reserves, Page 53.

The commercial lines underwriting expense ratio increased for the third quarter and decreased for the first nine months of 2023, compared with the same periods a year ago.

The commercial lines underwriting expense ratio increased for the first three months of 2024, compared with the same period a year ago.

The increase was largely due to an increase in profit-sharing commissions for agencies.

The ratios also included ongoing expense management efforts and higher earned premiums.

Cincinnati Financial Corporation Third-Quarter 2023 10-Q

Commercial Lines Insurance Losses Incurred by Size

(Dollars in millions, net of reinsurance) Three months ended September 30, Nine months ended September 30,

2023 2022 % Change 2023 2022 % Change

(Dollars in millions, net of reinsurance) Three months ended March 31,

2024 2023 % Change

Current accident year losses greater than $5 million $ — $ 30 (100)

17 unchanged sentences

Our analysis continues to indicate no unexpected concentration of these large losses and case reserve increases by risk category, geographic region, policy inception, agency or field marketing territory.

The third-quarter 2023 commercial lines total large losses incurred of $76 million, net of reinsurance, was higher than the quarterly average of $56 million during full-year 2022 and the $73 million of total large losses incurred for the third quarter of 2022.

The decrease in commercial lines large losses for the first nine months of 2023 was primarily due to our commercial casualty line of business.

The third-quarter 2023 ratio for commercial lines total large losses matched last year's third-quarter ratio.

The third-quarter 2023 amount of total large losses incurred unfavorably contributed to the decrease in the nine-month 2023 total large loss ratio, compared with 2022, as it partially offset a first-half 2023 ratio that was 0.7 points lower than the first half of 2022.

We believe results for the three- and nine-month periods largely reflected normal fluctuations in loss patterns and normal variability in large case reserves for claims above $2 million.

Cincinnati Financial Corporation Third-Quarter 2023 10-Q

The first-quarter 2024 commercial lines total large losses incurred of $23 million, net of reinsurance, was lower than the quarterly average of $74 million during full-year 2023 and the $45 million of total large losses incurred for the first quarter of 2023.

The decrease in commercial lines large losses for the first three months of 2024 was primarily due to our commercial property line of business.

The first-quarter 2024 ratio for commercial lines total large losses was 2.1 percentage points lower than last year's first-quarter ratio.

We believe results for the three-month period largely reflected normal fluctuations in loss patterns and normal variability in large case reserves for claims above $2 million.

Cincinnati Financial Corporation First-Quarter 2024 10-Q

PERSONAL LINES INSURANCE RESULTS

(Dollars in millions) Three months ended September 30, Nine months ended September 30,

2023 2022 % Change 2023 2022 % Change

(Dollars in millions) Three months ended March 31,

2024 2023 % Change

Earned premiums $ 588 $ 464 27

8 unchanged sentences

Underwriting expenses 173 136 27

Underwriting profit (loss) $ 1 $ (18) nm $ (92) $ (2) nm

Underwriting profit (loss) $ 37 $ (57) nm

Ratios as a percent of earned premiums:

10 unchanged sentences

Performance highlights for the personal lines segment include:

• Premiums – Personal lines earned premiums and net written premiums continued to grow during the third quarter and first nine months of 2023, including increased new business and renewal written premiums that included higher average pricing.

Cincinnati Private Client SM net written premiums included in the personal lines insurance segment results totaled approximately $356 million and $938 million for the third quarter and first nine months of 2023, compared with $249 million and $685 million for the same periods of 2022.

Cincinnati Private Client net written premiums for the respective periods included excess and surplus lines homeowner policies with premiums totaling $34 million in third-quarter 2023, $85 million in first nine months of 2023, $15 million in third-quarter 2022 and $49 million for the first nine months of 2022.

• Premiums – Personal lines earned premiums and net written premiums continued to grow during the first three months of 2024, including increased agency new business and renewal written premiums that included higher average pricing.

Cincinnati Private Client SM net written premiums included in the personal lines insurance segment results totaled approximately $330 million for the first three months of 2024, compared with $233 million for the same period of 2023.

Cincinnati Private Client net written premiums for the respective periods included excess and surplus lines homeowner policies with premiums totaling $34 million in first three months of 2024 and $19 million for the first three months of 2023.

The table below analyzes the primary components of premiums.

Agency renewal written premiums increased 24% and 22% for the third quarter and first nine months of 2023, reflecting rate increases in selected states, a higher level of insured exposures and other factors such as higher policy retention rates and changes in policy deductibles or mix of business.

Part of the insured exposure increase reflects our response to inflation effects that increase the cost of building materials to repair damaged homes.

We estimate that premium rates for our personal auto line of business increased at average percentages in the high-single-digit range during the first nine months of 2023, with the third quarter in the low-double-digit range.

We plan to increase rates aggressively in future quarters, and we expect full-year 2023 written premiums will include an average rate increase of approximately 10% for our personal auto line of business.

For our homeowner line of business, we estimate that premium rates for the first nine months of 2023 increased at average percentages in the mid-single-digit range, with the third quarter near the low end of the high-single-digit

Cincinnati Financial Corporation Third-Quarter 2023 10-Q

Agency renewal written premiums increased 27% for the first three months of 2024, reflecting rate increases in selected states, a higher level of insured exposures and other factors such as higher policy retention rates and changes in policy deductibles or mix of business.

Part of the insured exposure increase reflects our response to inflation effects that increase the cost of building materials used to repair damaged homes.

We estimate that premium rates for our personal auto line of business increased at average percentages in the low-double-digit range during the first three months of 2024.

For our homeowner line of business, we estimate that premium rates for the first three months of 2024 increased at average percentages in the high-single-digit range.

For both our personal auto and homeowner lines of business, some individual policies experienced lower or higher rate changes based on each risk's specific characteristics and enhanced pricing precision enabled by predictive models.

Personal lines new business written premiums increased $41 million or 51% for the third quarter, compared with the same period of 2022 with approximately half of the increase occurring in the middle market part of our personal lines insurance segment.

For the first nine months of 2023, compared with the same period of 2022, personal lines new business written premiums increased $86 million or 39%, including approximately $31 million from Cincinnati Private Client policies and $55 million from middle-market policies.

Personal lines new business written premiums increased $43 million or 54% for the first three months of 2024, compared with the same period of 2023, including approximately $15 million from Cincinnati Private Client

Cincinnati Financial Corporation First-Quarter 2024 10-Q

policies and $28 million from middle-market policies.

We believe we maintained underwriting and pricing discipline across all personal lines markets as we expanded use of enhanced pricing precision tools.

Other written premiums include premiums ceded to reinsurers as part of our reinsurance ceded program.

For our personal lines insurance segment, an increase in 2023 ceded premiums reduced net written premiums by $1 million and $12 million for the third quarter and first nine months, compared with the same periods of 2022.

For our personal lines insurance segment, an increase in 2024 ceded premiums reduced net written premiums by approximately $2 million for the first three months of 2024, compared with the same period of 2023.

Personal Lines Insurance Premiums

(Dollars in millions) Three months ended September 30, Nine months ended September 30,

2023 2022 % Change 2023 2022 % Change

(Dollars in millions) Three months ended March 31,

2024 2023 % Change

Agency renewal written premiums $ 494 $ 388 27

2 unchanged sentences

Net written premiums 595 448 33

Unearned premium change (119) (71) (68) (239) (140) (71)

Unearned premium change (7) 16 nm

Earned premiums $ 588 $ 464 27

• Combined ratio – Our personal lines combined ratio for the third quarter of 2023 improved by 4.6 percentage points, compared with third-quarter 2022, including a decrease of 2.0 points in losses from catastrophes.

The third-quarter 2023 combined ratio also included a decrease of 3.2 percentage points from current accident year loss and loss expenses before catastrophe losses, including a decrease of 2.0 points for the IBNR portion and a decrease of 1.2 points for the case incurred portion.

For the first nine months of 2023, the combined ratio increased by 6.0 percentage points, compared with the same period a year ago, including an increase of 6.8 points in losses from catastrophes.

The nine-month 2023 combined ratio also included a decrease of 1.1 points from current accident year loss and loss expenses before catastrophe losses, including an increase of 2.5 points for the IBNR portion and a decrease of 3.6 points for the case incurred portion.

Those current accident year ratios were measured as of September 30 of the respective years and included an increase of 1.3 percentage points for the third quarter, and a decrease of 0.5 points for the first nine months of 2023, in the ratio for large losses of $2 million or more per claim, discussed below.

• Combined ratio – Our personal lines combined ratio for the first quarter of 2024 improved by 18.6 percentage points, compared with first-quarter 2023, including a decrease of 15.9 points in losses from catastrophes.

The first-quarter 2024 combined ratio also included a decrease of 2.2 percentage points from current accident year loss and loss expenses before catastrophe losses, including an increase of 2.2 points for the IBNR portion and a decrease of 4.4 points for the case incurred portion.

Those current accident year ratios were measured as of March 31 of the respective years and included a decrease of 0.1 percentage points for the first three months of 2024, in the ratio for large losses of $2 million or more per claim, discussed below.

When estimating the ultimate cost of total loss and loss expenses, we consider many factors, including trends in inflation, historical paid and reported losses, large loss activity and other data or information for the industry or our company.

Elevated inflation was a driver of higher losses and loss expenses as costs have increased significantly to repair damaged autos or homes that we insure.

Elevated inflation in recent years has been a driver of higher losses and loss expenses as costs have increased significantly to repair damaged autos or homes that we insure.

Due to increased uncertainty regarding ultimate losses, we intend to remain prudent in reserving for estimated ultimate losses until longer-term loss cost trends become more clear.

For example, for the first nine months of 2023, personal auto incurred loss and loss expenses before catastrophe losses increased $45 million or 13%, compared with the same period of 2022, including an increase of $18 million or 86% for the IBNR portion, while earned premiums rose 13%.

Catastrophe losses and loss expenses accounted for 13.9 and 19.2 percentage points of the combined ratio for the third quarter and first nine months of 2023, compared with 15.9 and 12.4 points for the same periods a year ago.

Catastrophe losses and loss expenses accounted for 8.8 percentage points of the combined ratio for the first three months of 2024, compared with 24.7 points for the same period a year ago.

The 10-year annual average catastrophe loss ratio for the personal lines segment through 2023 was 11.4 percentage points, and the five-year annual average was 13.2 percentage points.

2 unchanged sentences

In addition, greater geographic diversification is expected to reduce the volatility of homeowner loss ratios attributable to weather-related catastrophe losses over time.

Cincinnati Financial Corporation Third-Quarter 2023 10-Q

The net effect of reserve development on prior accident years during the third quarter and first nine months of 2023 was favorable for personal lines overall by $8 million and $54 million, compared with $8 million and $56 million of favorable development for the same periods of 2022.

Our homeowner line of business was the primary contributor to the personal lines net favorable reserve development for the first nine months of 2023.

The net effect of reserve development on prior accident years during the first three months of 2024 was favorable for personal lines overall by $33 million, compared with $31 million of favorable development for the same period of 2023.

Our homeowner line of business was the primary contributor to the personal lines net favorable reserve development for the first three months of 2024.

The net favorable reserve development was primarily due to lower-than-anticipated loss emergence on known claims.

The personal lines underwriting expense ratio increased for the third quarter and decreased for the first nine months of 2023, compared with the same periods a year ago.

The increase for third-quarter 2023 was primarily due to increases in reinsurance commissions and profit-sharing commissions for agencies while the nine-month 2023 decrease was mainly due to a decrease in profit-sharing commissions for agencies.

The personal lines underwriting expense ratio increased for the first three months of 2024, compared with the same period a year ago.

The increase was primarily due to an increase in profit-sharing commissions for agencies.

The ratios also included ongoing expense management efforts and higher earned premiums.

Cincinnati Financial Corporation First-Quarter 2024 10-Q

Personal Lines Insurance Losses Incurred by Size

(Dollars in millions, net of reinsurance) Three months ended September 30, Nine months ended September 30,

2023 2022 % Change 2023 2022 % Change

(Dollars in millions, net of reinsurance) Three months ended March 31,

2024 2023 % Change

Current accident year losses greater than $5 million $ — $ 6 (100)

2 unchanged sentences

Total large losses incurred 21 15 40

Losses incurred but not reported 7 9 (22) 60 7 nm

Losses incurred but not reported 22 27 (19)

Other losses excluding catastrophe losses 231 187 24

12 unchanged sentences

In the third quarter of 2023, the personal lines total large loss ratio, net of reinsurance, was 1.1 percentage points higher than last year's third quarter.

The increase in personal lines total large losses incurred for the first nine months of 2023 occurred primarily for our homeowner line of business.

We believe results for the three- and nine-month periods largely reflected normal fluctuations in loss patterns and normal variability in large case reserves for claims above $2 million.

Cincinnati Financial Corporation Third-Quarter 2023 10-Q

In the first quarter of 2024, the personal lines total large loss ratio, net of reinsurance, was 0.3 percentage points higher than last year's first quarter.

The increase in personal lines total large losses incurred for the first three months of 2024 occurred primarily for our homeowner line of business.

We believe results for the three-month period largely reflected normal fluctuations in loss patterns and normal variability in large case reserves for claims above $2 million.

Cincinnati Financial Corporation First-Quarter 2024 10-Q

EXCESS AND SURPLUS LINES INSURANCE RESULTS

(Dollars in millions) Three months ended September 30, Nine months ended September 30,

2023 2022 % Change 2023 2022 % Change

(Dollars in millions) Three months ended March 31,

2024 2023 % Change

Earned premiums $ 139 $ 127 9

Fee revenues 1 1 0 2 2 0

Fee revenues 1 — nm

Total revenues 140 127 10

1 unchanged sentence

Current accident year before catastrophe losses 92 88 5

Current accident year catastrophe losses (1) — nm 3 3 0

Prior accident years before catastrophe losses 1 (7) nm (13) (13) 0

Prior accident years catastrophe losses (1) — nm (1) — nm

Current accident year catastrophe losses 1 2 (50)

Prior accident years before catastrophe losses (2) (8) 75

Prior accident years catastrophe losses (1) (1) 0

Loss and loss expenses 90 81 11

14 unchanged sentences

Performance highlights for the excess and surplus lines segment include:

• Premiums – Excess and surplus lines earned premiums and net written premiums continued to grow during the third quarter and first nine months of 2023, compared with the same periods a year ago, largely due to increases in agency new business written premiums.

For both 2023 periods, excess and surplus lines policy renewals experienced estimated average price increases at percentages in the high-single-digit range.

• Premiums – Excess and surplus lines earned premiums and net written premiums continued to grow during the first quarter of 2024, compared with the same period a year ago, including increases in both agency renewal and new business written premiums.

For the first three months of 2024, excess and surplus lines policy renewals experienced estimated average price increases at percentages in the high-single-digit range.

We measure average changes in excess and surplus lines renewal pricing as the percentage rate of change in renewal premium for the new policy period compared with the premium for the expiring policy period, assuming no change in the level of insured exposures or policy coverage between those periods for respective policies.

New business written premiums produced by agencies increased by 26% for the third quarter and 25% for the first nine months of 2023 compared with the same periods of 2022, as we continued to carefully underwrite each policy in a highly competitive market.

New business written premiums produced by agencies increased by 11% for the first three months of 2024 compared with the same period of 2023, as we continued to carefully underwrite each policy in a highly competitive market.

Some of what we report as new business came from accounts that were not new to our agents.

We believe our agents' seasoned accounts tend to be priced more accurately than business that may be less familiar to them.

Cincinnati Financial Corporation Third-Quarter 2023 10-Q

Cincinnati Financial Corporation First-Quarter 2024 10-Q

Excess and Surplus Lines Insurance Premiums

(Dollars in millions) Three months ended September 30, Nine months ended September 30,

2023 2022 % Change 2023 2022 % Change

(Dollars in millions) Three months ended March 31,

2024 2023 % Change

Agency renewal written premiums $ 113 $ 106 7

4 unchanged sentences

Earned premiums $ 139 $ 127 9

• Combined ratio – The excess and surplus lines combined ratio decreased by 3.4 percentage points for the third quarter but increased 2.5 points for the first nine months of 2023, compared with the same periods of 2022, with the change for both periods primarily due to current accident year loss and loss expenses before catastrophe losses.

The third-quarter 2023 ratio for current accident year loss and loss expenses before catastrophe losses was 10.0 percentage points lower, compared with the 74.8% accident year 2022 ratio measured as of September 30, 2022, including a decrease of 6.0 points for the IBNR portion and a decrease of 4.0 points for the case incurred portion.

The nine-month 2023 ratio for current accident year loss and loss expenses before catastrophe losses was 2.5 percentage points higher, compared with the 65.4% accident year 2022 ratio measured as of September 30, 2022, including an increase of 9.1 points for the IBNR portion and a decrease of 6.6 points for the case incurred portion.

Excess and surplus lines net reserve development on prior accident years, as a ratio to earned premiums, was an unfavorable 0.7% for the third quarter and a favorable 3.5% for the first nine months of 2023, compared with favorable 6.0% and 3.8% for the same periods of 2022.

The $14 million of net favorable reserve development recognized during the first nine months of 2023 was mostly for accident year 2022.

The favorable reserve development was due primarily to lower-than-anticipated loss emergence on known claims.

• Combined ratio – The excess and surplus lines combined ratio increased by 2.0 percentage points for the first quarter of 2024, compared with the same period of 2023, with the change primarily due to lower favorable reserve development on prior accident year loss and loss expenses.

The first-quarter 2024 ratio for current accident year loss and loss expenses before catastrophe losses was 3.5 percentage points lower, compared with the 69.2% accident year 2023 ratio measured as of March 31, 2023.

Excess and surplus lines net reserve development on prior accident years, as a ratio to earned premiums, was a favorable 2.1% for the first three months of 2024, compared with favorable 6.5% for the same period of 2023.

The $3 million of net favorable reserve development recognized during the first three months of 2024 was mostly for accident year 2023 and was primarily due to lower-than-anticipated loss emergence on known claims.

The excess and surplus lines underwriting expense ratio increased slightly for the third quarter, mainly due to higher reinsurance commissions, and decreased for the first nine months of 2023, compared with the same periods of 2022.

Both 2023 periods benefited from ongoing expense management efforts and premium growth.

Cincinnati Financial Corporation Third-Quarter 2023 10-Q

The excess and surplus lines underwriting expense ratio increased for the first three months of 2024, largely due to an increase in profit-sharing commissions for agencies, compared with the same period of 2023.

The ratio for both periods also benefited from ongoing expense management efforts and premium growth.

Cincinnati Financial Corporation First-Quarter 2024 10-Q

Excess and Surplus Lines Insurance Losses Incurred by Size

(Dollars in millions, net of reinsurance) Three months ended September 30, Nine months ended September 30,

2023 2022 % Change 2023 2022 % Change

Current accident year losses greater than $5 million $ — $ — nm $ — $ — nm

(Dollars in millions, net of reinsurance) Three months ended March 31,

2024 2023 % Change

Current accident year losses greater than $5 million $ — $ — nm

Current accident year losses $2 million - $5 million — — nm

Large loss prior accident year reserve development — — nm (1) — nm

Total large losses incurred — — nm (1) 2 nm

Large loss prior accident year reserve development — — nm

Total large losses incurred — — nm

Losses incurred but not reported 30 27 11

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In the third quarter of 2023, the excess and surplus lines total ratio for large losses, net of reinsurance, matched last year's third quarter.

We believe results for the three- and nine-month periods largely reflected normal fluctuations in loss patterns and normal variability in large case reserves for claims above $2 million.

Cincinnati Financial Corporation Third-Quarter 2023 10-Q

In the first quarter of 2024, the excess and surplus lines total ratio for large losses, net of reinsurance, was 0.3 percentage points higher than last year's first quarter.

We believe results for the three-month period largely reflected normal fluctuations in loss patterns and normal variability in large case reserves for claims above $2 million.

Cincinnati Financial Corporation First-Quarter 2024 10-Q

LIFE INSURANCE RESULTS

(Dollars in millions) Three months ended September 30, Nine months ended September 30,

2023 2022 % Change 2023 2022 % Change

(Dollars in millions) Three months ended March 31,

2024 2023 % Change

Earned premiums $ 79 $ 77 3

7 unchanged sentences

Performance highlights for the life insurance segment include:

• Revenues – Revenues increased for the nine months ended September 30, 2023, compared with the same period a year ago, driven by higher earned premiums from term life insurance, our largest life insurance product line.

Net in-force life insurance policy face amounts increased 2% to $82.055 billion at September 30, 2023, from $80.482 billion at year-end 2022.

Fixed annuity deposits received for the three and nine months ended September 30, 2023, were $13 million and $38 million, compared with $10 million and $23 million for the same periods of 2022.

• Revenues – Revenues increased for the three months ended March 31, 2024, compared with the same period a year ago, driven by higher earned premiums from term life insurance, our largest life insurance product line.

Net in-force life insurance policy face amounts increased less than 1% to $82.670 billion at March 31, 2024, from $82.361 billion at year-end 2023.

Fixed annuity deposits received for the three months ended March 31, 2024, were $9 million, compared with $10 million for the same period of 2023.

Fixed annuity deposits have a minimal impact to earned premiums because deposits received are initially recorded as liabilities.

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Life Insurance Premiums

(Dollars in millions) Three months ended September 30, Nine months ended September 30,

2023 2022 % Change 2023 2022 % Change

(Dollars in millions) Three months ended March 31,

2024 2023 % Change

Term life insurance $ 57 $ 56 2

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We include only investment income credited to contract holders (including interest assumed in life insurance policy reserve calculations) in our life insurance segment results.

A profit of $38 million for our life insurance segment in the first nine months of 2023, compared with a profit of $21 million for the same period of 2022, was primarily due to more favorable mortality experience and higher fee revenues.

A profit of $10 million for our life insurance segment in the first three months of 2024, compared with a profit of $8 million for the same period of 2023, was primarily due to more favorable impacts from the unlocking of interest rate actuarial assumptions.

Life insurance segment benefits and expenses consist principally of contract holders' (policyholders') benefits incurred related to traditional life and interest-sensitive products and operating expenses incurred, net of deferred acquisition costs.

Total benefits decreased in the first nine months of 2023 due to more favorable mortality experience.

Life policy and investment contract reserves decreased due to an increase in market value discount rates, partially offset by continued growth in net in-force life insurance policy face amounts.

Mortality results decreased compared with the same period of 2022, in part due to pandemic-related death claims incurred in the first three months of last year.

Underwriting expenses for the first nine months of 2023 increased compared with the same period a year ago, largely due to higher general insurance expense levels compared to the same period of 2022.

Cincinnati Financial Corporation Third-Quarter 2023 10-Q

Total benefits decreased in the first three months of 2024 primarily due to more favorable impacts from the unlocking of interest rate actuarial assumptions.

Life policy and investment contract reserves decreased due to an increase in market value discount rates.

Mortality results improved compared with the same period of 2023.

Underwriting expenses for the first three months of 2024 increased compared with the same period a year ago, largely due to higher general insurance expense levels compared to the same period of 2023.

We recognize that assets under management, capital appreciation and investment income are integral to evaluating the success of the life insurance segment because of the long duration of life products.

On a basis that includes investment income and investment gains or losses from life-insurance-related invested assets, the life insurance subsidiary reported net income of $25 million and $65 million for the three and nine months ended September 30, 2023, compared with $23 million and $51 million for the three and nine months ended September 30, 2022.

The life insurance subsidiary portfolio had net after-tax investment gains of less than $1 million and net after-tax investment losses of $1 million for the three and nine months ended September 30, 2023, respectively, compared with net after-tax investment losses of $1 million for the three and nine months ended September 30, 2022.

Cincinnati Financial Corporation First-Quarter 2024 10-Q

On a basis that includes investment income and investment gains or losses from life-insurance-related invested assets, the life insurance subsidiary reported net income of $19 million for the three months ended March 31, 2024, and March 31, 2023.

The life insurance subsidiary portfolio had net after-tax investment losses of $2 million for the three months ended March 31, 2024, compared with net after-tax investment gains of $1 million for the three months ended March 31, 2023.

INVESTMENTS RESULTS

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Investment Income

Pretax investment income grew 17% for the third quarter and 14% for the first nine months of 2023, compared with the same periods of 2022.

Interest income increased by $25 million and $65 million for the three and nine months ended September 30, 2023, as net purchases of fixed-maturity securities in recent quarters and rising bond yields are working to generally offset effects of the low interest rate environment of the past several years.

Although dividend rates generally are increasing more slowly, our minor asset allocation adjustments in our equity portfolio and net purchases of equity securities in recent quarters partially offset the effect of a $5 million special dividend from one of our holdings in the second quarter of 2022, helping dividend income to grow by $3 million and $2 million for the three and nine months ended September 30, 2023.

Pretax investment income grew 17% for the first quarter of 2024, compared with the same period of 2023.

Interest income increased by $29 million for the first quarter, as net purchases of fixed-maturity securities in recent quarters and higher bond yields are working to generally offset effects of the low interest rate environment of the past several years.

Although dividend rates generally are increasing more slowly, minor asset allocation adjustments in our equity portfolio and net purchases of equity securities in recent quarters helped dividend income to grow by $6 million for the three months ended March 31, 2024.

Investments Results

(Dollars in millions) Three months ended September 30, Nine months ended September 30,

2023 2022 % Change 2023 2022 % Change

(Dollars in millions) Three months ended March 31,

2024 2023 % Change

Total investment income, net of expenses $ 245 $ 210 17

Investment interest credited to contract holders (31) (30) (3)

Investment gains and losses, net (456) (674) 32 84 (2,494) nm

Investments profit (loss), pretax $ (262) $ (508) 48 $ 648 $ (2,003) nm

Investment gains and losses, net 612 106 477

Investments profit, pretax $ 826 $ 286 189

We continue to consider the low interest rate environment that prevailed in recent years as well as the potential for a continuation of both elevated inflation and higher bond yields as we position our portfolio.

3 unchanged sentences

(Dollars in millions) % Yield Principal redemptions

At September 30, 2023

At March 31, 2024

Fixed-maturity pretax yield profile:

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Average yield and total expected maturities from the remainder of 2024 through 2026 4.71 $ 3,334

Cincinnati Financial Corporation Third-Quarter 2023 10-Q

Cincinnati Financial Corporation First-Quarter 2024 10-Q

The table below shows the average pretax yield-to-amortized cost for fixed-maturity securities acquired during the periods indicated.

The average yield for total fixed-maturity securities acquired during the first nine months of 2023 was higher than the 4.22% average yield-to-amortized cost of the fixed-maturity securities portfolio at the end of 2022.

Our fixed-maturity portfolio's average yield of 4.35% for the first nine months of 2023, from the investment income table below, was also higher than the 4.22% yield for the year-end 2022 fixed-maturities portfolio.

Three months ended September 30, Nine months ended September 30,

2023 2022 2023 2022

The average yield for total fixed-maturity securities acquired during the first three months of 2024 was higher than the 4.60% average yield-to-amortized cost of the fixed-maturity securities portfolio at the end of 2023.

Our fixed-maturity portfolio's average yield of 4.65% for the first three months of 2024, from the investment income table below, was also higher than the 4.60% yield for the year-end 2023 fixed-maturities portfolio.

Three months ended March 31,

Average pretax yield-to-amortized cost on new fixed-maturities:

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Average yields in this table are based on the average invested asset and cash amounts indicated in the table, using fixed-maturity securities valued at amortized cost and all other securities at fair value.

(Dollars in millions) Three months ended September 30, Nine months ended September 30,

2023 2022 % Change 2023 2022 % Change

(Dollars in millions) Three months ended March 31,

2024 2023 % Change

Investment income:

1 unchanged sentence

Dividends 72 66 9

Other 5 3 67 18 6 200

Less investment expenses 3 3 0

1 unchanged sentence

Less income taxes

37 30 23 106 90 18

Total investment income, after-tax $ 204 $ 176 16

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Effective tax rate 17.9 17.3

Cincinnati Financial Corporation Third-Quarter 2023 10-Q

Cincinnati Financial Corporation First-Quarter 2024 10-Q

Total Investment Gains and Losses

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The table below summarizes total investment gains and losses, before taxes.

(Dollars in millions) Three months ended September 30, Nine months ended September 30,

2023 2022 2023 2022

(Dollars in millions) Three months ended March 31,

Investment gains and losses:

6 unchanged sentences

Gross realized losses (1) (1)

Write-down of impaired securities with intent to sell — — (4) —

Change in allowance for credit losses, net (9) —

Subtotal (10) —

Other 7 15 (13) 37

Total investment gains and losses reported in net income 612 106

2 unchanged sentences

Total $ 557 $ 269

Of the 4,707 fixed-maturity securities in the portfolio, 202 securities were trading below 70% of amortized cost at September 30, 2023.

Of the 4,804 fixed-maturity securities in the portfolio, 12 securities were trading below 70% of amortized cost at March 31, 2024.

Our asset impairment committee regularly monitors the portfolio, including a quarterly review of the entire portfolio for potential credit losses.

We believe that if liquidity in the markets were to significantly deteriorate or economic conditions were to significantly weaken, we could experience declines in portfolio values and possibly increases in the allowance for credit losses or write-downs to fair value.

Fixed-maturity securities written down to fair value due to an intention to be sold were $4 million for the first nine months of 2023, in addition to a $2 million increase in the allowance for credit losses.

Fixed-maturity securities written down to fair value due to an intention to be sold and changes in the allowance for credit losses were each less than $1 million for the first nine months of 2022.

(Dollars in millions) Three months ended September 30, Nine months ended September 30,

2023 2022 2023 2022

Fixed maturities:

Real estate $ — $ — $ 4 $ —

Total fixed maturities $ — $ — $ 4 $ —

Cincinnati Financial Corporation Third-Quarter 2023 10-Q

Cincinnati Financial Corporation First-Quarter 2024 10-Q

We report as Other the noninvestment operations of the parent company and a noninsurance subsidiary, CFC Investment Company.

We also report as Other the underwriting results of Cincinnati Re and Cincinnati Global, including earned premiums, loss and loss expenses and underwriting expenses in the table below.

Total revenues for the first nine months of 2023 for our Other operations increased, compared with the same period of 2022, primarily due to earned premiums from Cincinnati Re and Cincinnati Global, with increases of $23 million and $43 million, respectively.

Cincinnati Re had $406 million of earned premiums for the first nine months of 2023 and generated an underwriting profit of $88 million.

Cincinnati Global had $193 million of earned premiums for the first nine months of 2023 and generated an underwriting profit of $32 million.

Total expenses for Other decreased for the first nine months of 2023, primarily due to loss and loss expenses from Cincinnati Re and Cincinnati Global.

Other income or loss in the table below represents profit or losses before income taxes.

For all periods shown except the first nine months of 2022, total other income or loss was driven by underwriting profit or loss from Cincinnati Re and Cincinnati Global.

Total other loss for the first nine months of 2022 was primarily due to interest expense.

(Dollars in millions) Three months ended September 30, Nine months ended September 30,

2023 2022 % Change 2023 2022 % Change

Total revenues for the first three months of 2024 for our Other operations decreased, compared with the same period of 2023, primarily due to earned premiums from Cincinnati Re and Cincinnati Global, with a decrease of $15 million and an increase of $4 million, respectively.

Cincinnati Re had $135 million of earned premiums for the first three months of 2024 and generated an underwriting profit of $29 million.

Cincinnati Global had $48 million of earned premiums for the first three months of 2024 and generated an underwriting profit of $14 million.

Total expenses for Other decreased for the first three months of 2024, primarily due to lower loss and loss expenses from Cincinnati Re and Cincinnati Global.

Other income in the table below represents profit before income taxes.

For all periods shown, total other income was driven by underwriting profit from Cincinnati Re and Cincinnati Global.

(Dollars in millions) Three months ended March 31,

2024 2023 % Change

Interest and fees on loans and leases $ 2 $ 2 0

Earned premiums 183 194 (6)

Other revenues 1 — nm 3 2 50

Other revenues 1 1 0

Total revenues 186 197 (6)

4 unchanged sentences

Total expenses 157 177 (11)

Total other income (loss) $ 30 $ (84) nm $ 71 $ (66) nm

We had $49 million of income tax benefit for the third quarter of 2023 and $126 million of income tax expense for the nine months ended September 30, 2023, compared with $161 million and $481 million of income tax benefit for the same periods of 2022.

The effective tax rate for the three and nine months ended September 30, 2023, was 33.1% and 16.0% compared with 27.9% and 24.3% for the same periods last year.

The change in our effective tax rate between periods was primarily due to large changes in our net investment gains and losses included in income for the periods and changes in underwriting income.

Total other income $ 29 $ 20 45

We had $198 million of income tax expense for the three months ended March 31, 2024, compared with $43 million for the same period of 2023.

The effective tax rate for the three months ended March 31, 2024, was 20.8% compared with 16.0% for the same period last year.

The change in our effective tax rate between periods was primarily due to large changes in our net investment gains and losses included in income for the periods and changes in underwriting income and investment income.

Historically, we have pursued a strategy of investing some portion of cash flow in tax-advantaged fixed-maturity and equity securities to minimize our overall tax liability and maximize after-tax earnings.

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Details about our effective tax rate are in this quarterly report Item 1, Note 9, Income Taxes.

Cincinnati Financial Corporation Third-Quarter 2023 10-Q

Cincinnati Financial Corporation First-Quarter 2024 10-Q

LIQUIDITY AND CAPITAL RESOURCES

At September 30, 2023, shareholders' equity was $10.624 billion, compared with $10.562 billion at December 31, 2022.

Total debt was $815 million at September 30, 2023, compared with $839 million at December 31, 2022.

At September 30, 2023, cash and cash equivalents totaled $899 million, compared with $1.264 billion at December 31, 2022.

At March 31, 2024, shareholders' equity was $12.654 billion, compared with $12.098 billion at December 31, 2023.

Total debt was $815 million at March 31, 2024, unchanged from December 31, 2023.

At March 31, 2024, cash and cash equivalents totaled $619 million, compared with $907 million at December 31, 2023.

In addition to our historically positive operating cash flow to meet the needs of operations, we have the ability to slow investing activities or sell a portion of our high-quality, liquid investment portfolio if such need arises.

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Subsidiary Dividends

Our lead insurance subsidiary declared dividends of $426 million to the parent company in the first nine months of 2023, compared with $504 million for the same period of 2022.

Our lead insurance subsidiary declared dividends of $145 million to the parent company in the first three months of 2024, compared with $142 million for the same period of 2023.

For full-year 2023, our lead insurance subsidiary paid dividends totaling $526 million to the parent company.

12 unchanged sentences

The table below shows a summary of the operating cash flow for property casualty insurance (direct method):

(Dollars in millions) Three months ended September 30, Nine months ended September 30,

2023 2022 % Change 2023 2022 % Change

(Dollars in millions) Three months ended March 31,

2024 2023 % Change

Premiums collected $ 2,044 $ 1,842 11

4 unchanged sentences

Cash flow from operations $ 364 $ 233 56

Collected premiums for property casualty insurance rose $511 million during the first nine months of 2023, compared with the same period in 2022.

Loss and loss expenses paid for the 2023 perio d increased $455 million.

Collected premiums for property casualty insurance rose $202 million during the first three months of 2024, compared with the same period in 2023.

Loss and loss expenses paid for the 2024 perio d decreased $9 million.

Commissions and other underwriting expenses pai d increased $98 million.

Cincinnati Financial Corporation Third-Quarter 2023 10-Q

We discuss our future obligations for claims payments and for underwriting expenses in our 2023 Annual Report on Form 10-K, Item 7, Obligations, Page 97.

Cincinnati Financial Corporation First-Quarter 2024 10-Q

Capital Resources

At September 30, 2023, our debt-to-total-capital ratio was 7.1%, considerably below our 35% covenant threshold, with $790 million in long-term debt and $25 million in borrowing on our revolving short-term line of credit.

At September 30, 2023, $275 million was available for future cash management needs as part of the general provisions of the line of credit agreement, with another $300 million available as part of an accordion feature.

Based on our capital requirements at September 30, 2023, we do not anticipate a material increase in debt levels exceeding the available line of credit amount during the year.

At March 31, 2024, our debt-to-total-capital ratio was 6.1%, considerably below our 35% covenant threshold, with $790 million in long-term debt and $25 million in borrowing on our revolving short-term line of credit.

At March 31, 2024, $275 million was available for future cash management needs as part of the general provisions of the line of credit agreement, with another $300 million available as part of an accordion feature.

Based on our capital requirements at March 31, 2024, we do not anticipate a material increase in debt levels exceeding the available line of credit amount during the year.

As a result, we expect changes in our debt-to-total-capital ratio to continue to be largely a function of the contribution of unrealized investment gains or losses to shareholders' equity.

We have an unsecured letter of credit agreement that provides a portion of the capital needed to support Cincinnati Global's obligations at Lloyd's.

The amount of this unsecured letter of credit agreement was $94 million at September 30, 2023, with no amounts drawn.

On March 23, 2023, we amended our line of credit agreement to replace LIBOR with SOFR plus a credit spread adjustment.

The amount of this unsecured letter of credit agreement was $94 million at March 31, 2024, with no amounts drawn.

We provide details of our three long-term notes in this quarterly report Item 1, Note 3, Fair Value Measurements.

1 unchanged sentence

Four independent ratings firms award insurer financial strength ratings to our property casualty insurance companies and three firms rate our life insurance company.

Those firms made no changes to our parent company debt ratings during the first nine months of 2023.

Those firms made no changes to our parent company debt ratings during the first three months of 2024.

Our debt ratings are discussed in our 2023 Annual Report on Form 10-K, Item 7, Liquidity and Capital Resources, Long-Term Debt, Page 96.

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In addition to our contractual obligations, we have other property casualty operational commitments:

• Commissions – Commissions paid were $1.153 billion in the first nine months of 2023.

• Commissions – Commissions paid were $550 million in the first three months of 2024.

Commission payments generally track with written premiums, except for annual profit-sharing commissions typically paid during the first quarter of the year.

• Other underwriting expenses – Many of our underwriting expenses are not contractual obligations, but reflect the ongoing expenses of our business.

Noncommission underwriting expenses paid were $619 million in the first nine months of 2023.

There were no contributions to our qualified pension plan during the first nine months of 2023.

Cincinnati Financial Corporation Third-Quarter 2023 10-Q

Noncommission underwriting expenses paid were $258 million in the first three months of 2024.

There were no contributions to our qualified pension plan during the first three months of 2024.

Cincinnati Financial Corporation First-Quarter 2024 10-Q

Investing Activities

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In January 2024, the board of directors declared regular quarterly cash dividends of 81 cents per share for an indicated annual rate of $3.24 per share.

During the first nine months of 2023, we used $338 million to pay cash dividends to shareholders.

During the first three months of 2024, we used $116 million to pay cash dividends to shareholders.

PROPERTY CASUALTY INSURANCE LOSS AND LOSS EXPENSE RESERVES

1 unchanged sentence

Reserving practices are discussed in our 2023 Annual Report on Form 10-K, Item 7, Property Casualty Loss and Loss Expense Obligations and Reserves, Page 98.

Total gross reserves at September 30, 2023, increased $669 million compared with December 31, 2022.

Case loss reserves increased by $212 million, IBNR loss reserves increased by $338 million and loss expense reserves increased by $119 million.

The total gross increase was primarily due to our commercial casualty and commercial auto lines of business and also Cincinnati Re and our excess and surplus lines insurance segment.

Cincinnati Financial Corporation Third-Quarter 2023 10-Q

Total gross reserves at March 31, 2024, increased $203 million compared with December 31, 2023.

Case loss reserves decreased by $57 million, IBNR loss reserves increased by $250 million and loss expense reserves increased by $10 million.

The total gross increase was primarily due to our commercial casualty and homeowner lines of business and also Cincinnati Re and our excess and surplus lines insurance segment.

Cincinnati Financial Corporation First-Quarter 2024 10-Q

Property Casualty Gross Reserves

1 unchanged sentence

Case reserves IBNR reserves Percent of total

At September 30, 2023

At March 31, 2024

Commercial lines insurance:

32 unchanged sentences

LIFE POLICY AND INVESTMENT CONTRACT RESERVES

Gross life policy and investment contract reserves were $2.920 billion at September 30, 2023, compared with $3.015 billion at year-end 2022, reflecting an increase in market value discount rates partially offset by continued growth in life insurance policies in force.

Gross life policy and investment contract reserves were $3.013 billion at March 31, 2024, compared with $3.068 billion at year-end 2023, primarily due to an increase in market value discount rates.

We discussed our life insurance reserving practices in our 2023 Annual Report on Form 10-K, Item 7, Life Insurance Policyholder Obligations and Reserves, Page 104, and updated that disclosure in this quarterly report Item 1, Note 1, Accounting Policies.

Cincinnati Financial Corporation Third-Quarter 2023 10-Q

Cincinnati Financial Corporation First-Quarter 2024 10-Q

OTHER MATTERS

4 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis